Why Some Home Health Providers Are Still Struggling With Low-Utilization Payment Adjustments

Following the implementation of the Patient-Driven Groupings Model (PDGM) – and during the height of the COVID-19 pandemic – home health providers struggled significantly with Low-Utilization Payment Adjustments (LUPAs).

Since then, some providers have found ways to mitigate them, and others haven’t.

Broadly, LUPAs occur in fee-for-service Medicare when a provider does not meet a certain threshold of visits during a care episode. They result in a reduction in reimbursement.


“They only reimburse you for the visits that occurred, rather than giving you that 30-day PDGM period payment,” Carissa McKenna, director of clinical consulting at McBee Associates, told Home Health Care News.

McBee Associates is a consulting firm that works with hospital, home health, hospice and skilled nursing clients.

In 2020, nearly two-thirds of agencies said LUPAs at least doubled, according to National Association for Home Care & Hospice (NAHC) data.


McKenna noted that providers struggled with LUPAs for a variety of reasons.

“I think that providers really struggled with adjusting to both the changes in the 30-day period, and then the change in varying LUPA thresholds,” she said. “I think that it was compounded by the fact that the LUPA threshold in the HIPPS code is not finalized until your coding has been completed and finalized, and your OASIS has been reviewed and locked. That can be a few days or even longer.”

The other major headwind was the impact of the COVID-19 pandemic, Anthony D’Alonzo, division director and senior vice president of practice analytics and insights at Bayada Home Health Care, told HHCN.

“There was limited ability, in some cases, to access our patients,” he said. “In some cases, patients refused care or were being more restrictive around who was coming into the home.”

The Moorestown, New Jersey-based Bayada is one of the largest home health providers in the country. It has over 360 locations across 23 states and six other countries.

Providers that were seeing increased LUPA rates saw significant impact on their bottom lines.

“If you are above the national average for LUPA rates, then you are, in essence, going to average a lower total billing amount, because you have a higher than projected number of patients who are not receiving the episodic-based payment,” D’Alonzo said.

Amid the pandemic, home health agencies reported that LUPA rates were decreasing average reimbursement by roughly 75%, according to NAHC data.

At Bayada, LUPA rates have mostly stabilized since the challenges of the early years.

“CMS has almost artificially set the target, so it will always be around 10% for a LUPA rate,” D’Alonzo said. “It’s the lowest decile of visits, given a certain clinical group and functional group. If you’re hovering somewhere around 10%, you’re generally in the norm, or at least close to the national average. Over the last two years, we’ve been at, or slightly below, the national average as an organization.”

D’Alonzo mostly credits a return to normal for this stabilization of LUPA rates at Bayada. The company hasn’t made a focus on LUPA rates a major part of its strategy, but some attention is given to national averages, he said.

“We do look at the LUPA rate and compare ourselves to national averages,” D’Alonzo said. “We look at it across each of our locations. We look for outliers in certain areas or in certain service offices. If there are spots where we are really far off from the national average, we will address that, but as a whole, it is not a major part of our episode management strategy. It’s not something that we really emphasize.”

D’Alonzo noted that aside from LUPAs, there are other measures Bayada focuses on that they believes are more important indicators of clinical appropriateness and level of service.

When Bayada does zero-in on LUPA rates, the company breaks it down into early periods and late periods.

“You don’t necessarily just want to look at your overall LUPA percentage because there’s a pretty significant variation we found internally, just between the first 30 days and each subsequent 30 days,” D’Alonzo said. “If you’re looking at analytics, trying to determine if you’re on target, you always want to break it down by LUPA in the first 30 days, and then separately, what’s our LUPA rate in the later periods and subsequent 30 days. Because if you’re looking at the overall LUPA average, it might hide some inconsistency in either the first or later 30-day periods.”

Despite Bayada’s stable LUPA rates, McKenna pointed out that it’s more of a mixed bag across the industry.

“There are some providers that have adjusted well, and other providers are still struggling even now,” she said. “I think that those who are doing well either have a really great internal process and they’re very timely with their OASIS or coding, or their EMR is really doing a great job helping them identify the thresholds and keeping it in front of the clinicians.”

McKenna noted that there are still a lot of EMRs that don’t have features that help the staff at agencies manage LUPAs appropriately.

Through Q3 of 2022, McBee Associates — citing CMS data — has seen a national average LUPA rate around 7.6%. When looking at the breakdown between a period one versus subsequent periods, they’re seeing around 9.79%, and the subsequents at 6.54%.

“Breaking that down even a little bit further, out of that subsequent period LUPA, even though the percentage is a little bit lower, the majority of those — almost 84% — are only a single visit short of meeting that LUPA threshold,” McKenna said.

In other words, simple adjustments could go along way for providers still struggling in that second 30-day period.

“They’re either not recognizing that we’re in the second 30-day period, and are discharging with one visit, and so that’s a LUPA, or we are having a lot of missed visits, and then we end up only completing one visit in that second 30-day period,” McKenna said.

It’s important for providers to educate their staff on best practices on how to avoid LUPAs.

“Make sure staff are aware, and not just their field staff but anyone that’s involved with scheduling of 30-day billing periods,” McKenna said. “If they’re having to move a visit, [being cognizant] of where are they within the billing periods. And then, also, the LUPA thresholds — making sure that everyone has an understanding of that.”

Paying attention to patients’ needs is also key in avoiding LUPAs.

“Try not to overwhelm the patient,” McKenna said. “Don’t give too many visits in those first 30-days — nursing, physical therapy, occupational therapy, social work — all of that can be overwhelming if you’re providing too many visits. The patient starts refusing visits, but if we’re spreading the care through the 60-day episode, we should be able to better serve the patient and also mitigate any LUPA that could potentially occur.”

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